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Month: April 2016

From briefly looking at fintech in Africa to now my turning my attention to the fintech scene in Scandinavia.

The scene is really hotting up and who would have thought the concepts of finance and tech could result in something quite exciting? (As Susanne Chishti and Janos Barberis mention in The Fintech Book) London has been at the centre of fintech with an array of world class start-ups as well as being the finance capital of Europe.

While the media has been focused on the London scene, Scandinavia has continued to increase its fintech presence as the region plans to go cashless, in addition, digital banking and electronic payments have become commonplace.

Bills and coins represent only 2 per cent of Sweden’s currency, and Denmark has a goal to “eradicate cash” by 2030. (Bobs Guide, March 2016) Michael Kent, the CEO of Azimo, an international money transferring site recently mentioned in Bobs Guide : “Sweden and Denmark are two of the most vibrant and cosmopolitan countries in Europe, where digital payment innovation is ahead of the global curve.”

Between January 1, 2014 and end of March 2016, 51 fintech investments were made all over Scandinavia totalling $390.17 million. This number maybe small compared to the $5.4 billion that has been made by fintech firms in London, however, nearly one in 10 investments in Scandinavia is now made in the fintech sector.

According to data from The Nordic Web, Sweden is flying the fintech flag in the region by having 32 out of 51 fintech investments, and Stockholm has had a robust financial industry and history. Companies such as iZettle have really helped Nordic fintech gain interest from all over the world.

Klarna, another fintech company from the Swedish capital and one of the most prominent in Europe is championing this disruptive form of technology by allowing users to buy without the use of cards and is valued at over $2.25 billion and has raised $291.33 million in 6 rounds from 12 investors. iZettle also has a high valuation, and is currently valued at $244.04 million. Despite the hype of the London fintech scene, both of these companies clearly show how powerful the Nordic fintech scene has developed.

Nordic Fintech – A Cashless Society

It has been well documented that Scandinavians avoid cash and using tangible currency is decreasing. In Sweden, there’s less than 80 billion Swedish crowns in circulation (about €8 billion) and according to Niklas Ardvidsson of Stockholm’s KTH Royal Institute of Technology only 40 to 60 percent is actually still in regular circulation. The decline in physical cash clearly shows that Swedes prefer apps and credit cards when it comes to making a payment.

The rise in mobile usage and banking apps such as Swish, which was collaborated by Swedish and Danish banks respectively, allows users to transfer money via their bank account to anyone else with a bank account, no matter where they are.

Nordic countries are known for having a high sense of trust, this linked with a forward thinking approach and embracing new technology has made using these apps even more desirable to use.

An Alternative Way Of Thinking

It can be said that the Scandinavian management style has contributed to the Nordic fintech scene and has helped shape the region as a major player in Europe. A bottom-­up structure that focuses on “all for one and one for all” attitude gives a completely different dynamic that you wouldn’t find anywhere else.

Another factor that is particularly interesting is that in Scandinavia is rather than seeing successful firms as competition, they look up to them as real­-life role models.

Their culture and management styles has without a doubt helped push these array of innovative fintech products/services to the next level. The Nordic fintech scene maybe behind with what has been achieved in London, however, fintech start-ups from around the globe can learn a lot from the likes of iZettle and Klarna. They have helped shape Scandinavia as an educative fintech hub and a place that inspires others who want to live in a virtually cash-free society.

A century ago Argentina was one of the most richest countries in the world and was part of an ‘elite club’ of prosperous nations and as we have seen in recent years countries such as neighbouring Brazil overtook Britain in terms of total GDP. However, this was expected, as World Finance’sTom Bailey points out in a recent article, European nations comprise a small corner of the earth, and as larger nations turn their subsistence farmers into industrial workers (and then service sector employees), overtaking the old powers of Europe is inevitable. It is less of a fall and more of an expected correction and relative decline.

Sadly, those prosperous years of being part of an ‘elite club’ are well and truly over. Cast your minds back to 2001/2002 the Argentinian Peso lost three-quarters of its value (linked to various external shocks such as low prices for agricultural commodities and the devaluation of the Real in Brazil) and registered unemployment exceeded 25% which resulted in numerous public protests and violent scenes on the streets of Buenos Aires.

The Kirchner dynasty maybe over in Argentina, but newly elected Mauricio Macri (former Buenos Aires mayor and pictured above) has got a mammoth task of steering his country to economic safety. The centre-right leader intends to attract investment flows that will make Argentina globally competitive again.

As mentioned in Foreign Policy Magazine, Macri’s macroeconomic challenges are vast, however, and success will depend on his administration’s ability to curb a 5.4 percent GDP budget deficit (the biggest since 1982), temper soaring inflation (current annual levels are about 36 percent), and stimulate economic growth.

The question that remains in the Latin American country is whether Macri has enough time and support to put his agenda in place. Unfortunately unlike when Cristina Fernández de Kirchner was in power she had a full congress to back her, for Macri, he has less back-up when things take a nose dive. If that happens, you’ll bet your bottom Peso that Peronists will be ready to pounce.

Could Bitcoin Be An Alternative?

Moving away from the politics slightly, with a volatile currency and a string of dysfunctional banks in the country, could cryptocurrencies such as bitcoin be an alternative for Argentina?

It seems that quite a few in Argentina are pondering this very question and have already adopted the digital currency. Argentina has had the most bitcoin enthusiasts per capita, troubled economies in Latin America have also looked at the idea, with neighbouring Brazil and Venezuela playing catch up.

Bitcoin has proven to be a solution for many of the problems caused by inflation and subsequent capital controls. (Tech Crunch, March, 2016) As a result merchants and workers alike have started to look for an alternative and have started to use the cryptocurrency.

Bitcoin start-up BitPagos, is currently helping more than 200 hotels, both cheap and boutique, take credit-card payments from foreign tourists according to the NY Times. The money brought to Argentina using Bitcoin payments bypasses the high level of bureaucracy which is usually involved with receiving conventional payments from overseas.

A popular online retailer in the country, Avalancha, has been accepting bitcoin since last summer and has seen a large amount of bitcoin transactions grow steadily since using the cryptocurrency on the site. Avalancha offers their customers a 10 percent discount when they use Bitcoin. The reason behind this is because credit card payments cost Avalancha more than 10 percent as a result of the troubled Argentine financial system.

Looking for alternative methods such as bitcoin has led to like-minded people joining in unison and creating a bitcoin embassy in Buenos Aires; a four-story building that’s home to eight start-ups whose businesses depend on Bitcoin transactions.

From start-ups to even local politicians have shown an interest in the cryptocurrency, Argentina’s youngest mayor Martín Yezatweeted back in January about having a bitcoin agenda in place as well as regulatory approval for the popular ridesharing platform Uber.

Adopting bitcoin as an alternative for Macri aka “President Facebook” because of his big social presence would be a massive step in countering its current economic crisis. Argentina and the rest of Latin America has a lot of opportunities to push the cryptocurrency and make it more mainstream.